SHEIN listing: I have mixed feelings

EasyEquities VP of Brand Carly Esterhuizen shares her struggle with whether she will participate in the highly anticipated SHEIN IPO, set to take place in 2024.

I’m just going to come out and say it: I have, on a few occasions, ordered from SHEIN; a fast-fashion e-commerce retailer founded in China in 2012.

SHEIN is set to list on the London Stock Exchange this year and I’m in two minds as to whether I want to further support this company – as a consumer and a shareholder.

The variety, size inclusivity and affordability got me immediately interested in SHEIN and when I placed my first order, I couldn’t believe how cheap and easy it was to access thousands and thousands of outfits. And I’m not alone. SHEIN sells its products in over 150 countries and as of the end of 2022, SHEIN has approximately 74.7 million total users worldwide. This includes around 65 million app users. The company has seen significant growth, expanding from 2.8 million users in 2017 to its current number​.

That’s the kind of growth that gets me excited as an investor. But then there’s the other, not so good press to consider.

Investigations have found that workers in some of SHEIN's supplier factories are paid very low wages and work excessively long hours. For example, some workers reportedly work 75-hour weeks, far exceeding the legal limit in many countries.

The company has also been accused of not providing clear information about its suppliers and the conditions under which they operate. This lack of transparency makes it difficult for consumers and watchdog organizations to verify ethical practices within the supply chain.

There’s also the environmental impact to consider.

SHEIN's fast fashion business model promotes rapid production and turnover of clothing, leading to high levels of waste. Clothing from SHEIN, like other fast fashion brands, is often designed to be disposable, contributing to significant environmental pollution.

Not cool SHEIN, not cool.

From an investor standpoint I’ve done a bit of reading that helped give me some perspective.

In this article by The Motley Fool its highlighted that the fast fashion industry is a competitive one, and that many of the currently listed companies in this space have underperformed in the last decade.

When it comes to revenue however, SHEIN certainly has the edge. You can see how it compares to some of it’s biggest competitors (like Temu) in this article by Kiplinger.

And this article by InvestorPlace cites that the company has secured Goldman Sachs, JPMorgan and Morgan Stanley as lead underwriters for the initial public offering. Those are some big, reputable companies.

Here’s the conundrum: Even if SHEIN makes a good investment case and I’ve had a good experience with the brand as a customer, could I invest in a company that has some shady practices that go against my own moral imperatives?

The answer is probably no… but don’t quote me on that just yet.

There is another outcome here to be considered. If SHEIN is a publicly listed company its shareholders have the power to influence its behavior by exercising their rights as owners. This approach, often referred to as “Shareholder Activism” can be used to push for changes in corporate policy, management, financial structure, or other aspects of corporate governance.

Starbucks is an example of this. Shareholders of Starbucks have filed various resolutions over the years focusing on issues like corporate social responsibility and executive compensation. For instance, in recent years, there have been resolutions urging Starbucks to improve its environmental sustainability practices and enhance transparency regarding labor practices. These resolutions have sometimes led to changes in corporate policies or increased focus on the issues raised​.

Being a shareholder gives you part ownership of the company you are invested in – that’s really powerful. We’ve seen how retail investors can move the market (Anyone remember GameStop?) and so there’s no reason why we can’t rally for positive change, and profit too.

SHEIN – are you investing? I’d love to hear your thoughts.

Hit me up on X - @sharegalcarly